Bitcoin (BTC) Proves No Safe-haven Play

Bitcoin (BTC) Proves No Safe-haven Play

Bitcoin (BTC) Proves No Safe-haven Play


The global equity market sell off spilled over into the cryptocurrency space, with major digital assets including Bitcoin, Ethereum and Ripple shedding billions in market value in just mins.

The unexpected collapse in the digital currency sector follows a period of price stability for the highly volatile market, and may suggest that investors are less likely to view the assets as safe-haven bets moving forward.

Thursday, we saw the biggest stock market decliner since February shocked markets around the world, causing most benchmarks to fall by at least 3.5%. The fall was driven in part by mounting fears of global trade tensions, tightening monetary policy, and higher interest rates.

Bitcoin, the world’s largest cryptocurrency by market capitalization traded around 6,174 Thursday morning, 6.8% lower  WTD.

Currently, Bitcoin is trading at: 6,211.68, +2.21 (+0.0356%), as of 1:37a BST, the market is open.

The cryptocurrency has gained 24.6% YTD, yet represents a near 69% plunge from recorded highs in December 2017 when the digital coin surged to just below 20,000.

Ethereum, Ripple and Bitcoin Cash were hit harder, falling over 10% as of Thursday morning. Galaxy Crypto Index crashed 10% Thursday morning, as well, heading into a 3rd day running of losses.

This morning’s crashes mark a significant shift from how cryptocurrencies typically respond to periods of poor performance in the stock market.

The cryptocurrency sector used to be viewed as a “safe haven,” independent from the broader market. In recent months, however, Bitcoin and other digital currencies have seen their prices fluctuate more or less in sync with the stock market.

“The days of crypto being the safe-haven play and having a high degree of detachment from the rest of the world are seemingly diminishing,” Ryan Rabaglia, head of Hong Kong-based trading and cryptocurrency dealing firm OSL said in an interview.

Mr. Rabaglia attributed the correlation between cryptocurrency and the broader market to increased institutional interest in the sector. However, the OSL market watcher predicted that may change moving forward.

“With the 2018 low of 5,800 being tested a number of times, our sights are set at that level for all further sell-offs,” added Mr. Rabaglia.

Mr. Rabaglia called blockchain, the underlying technology behind bitcoin and other cryptocurrencies, “the most over-hyped and least useful technology in human history,” many on The Street remain Bullish about the long-term prospects of the distributed ledger technology.

Stay tuned…

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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